Trump Touts China Buying Agriculture Products, But Traders Firmly Disagree

In a series of comments to reporters on Monday afternoon, President Trump was busy pumping more trade headlines to trigger algo buying and push E-Mini S&P500 futures above the 3k mark. The plan worked but didn’t generate a massive short-cover like the president was expecting. 

Here are some of the headlines President Trump dished out in the early afternoon to boost stocks (must defend 3K E-Mini S&P500 level) :

• 21-Oct-2019 11:54:18 AM – TRUMP SAYS TRADE DEAL WITH CHINA IS COMING ALONG GREAT
• 21-Oct-2019 12:38:43 PM – U.S. TRADE REPRESENTATIVE LIGHTHIZER SAYS U.S. TARGET IS TO HAVE PHASE ONE TRADE DEAL WITH CHINA BY TIME OF CHILE APEC SUMMIT, BUT STILL SOME ISSUES TO RESOLVE
• 21-Oct-2019 12:39:13 PM – TRUMP SAYS CHINA IS PURCHASING U.S. AGRICULTURAL PRODUCTS NOW
• 21-Oct-2019 12:40:03 PM – TRUMP SAYS ISSUES THAT WOULD NEED TO BE DEALT WITH IN PHASE TWO TRADE TALKS WITH CHINA ARE IN MANY WAYS A LOT EASIER THAN PHASE ONE ISSUES

Besides the apparent stock market pump, the president was trying to orchestrate around lunchtime — one particular headline stood out to us. 

• 21-Oct-2019 12:39:13 PM – TRUMP SAYS CHINA IS PURCHASING U.S. AGRICULTURAL PRODUCTS NOW

In a report over the weekend, several commodity traders told Reuters while President Trump has been touting massive agriculture purchases made by China in recent weeks — they said China logged zero soybean sales with the U.S. last week, along with no transactions at the USDA. 

“I’ve not had any inquiries at all for U.S. (shipments),” said one of the U.S. soybean exporters. “There were a few November boats bought from Brazil and several new-crop South American boats for March forward but nothing here.”

Soybeans are one of the leading agriculture products that the U.S. exports to China — so when Trump touts “China Is Purchasing U.S. Agricultural Products Now,” one would expect to see a whole bunch of soybeans — but as the one trader said, China abandoned the U.S. market for Brazil. 

U.S. vs. Brazil (Market share of China’s total soybean imports) pic.twitter.com/8tYdlbWbrT

— Michael McDonough (@M_McDonough) October 9, 2019

Since last Monday, China bought 480,000 tons of soybeans from Brazil, worth about $173 million, and will be shipped on eight bulk carriers.

Imagine if China were buying soybeans from the U.S., President Trump would have a field day on Twitter, but he can’t because, as per the traders said above, China is buying from Brazil. So as of now, the president’s trade headlines are just hearsay to pump the stock market. 

Also, check out a vessel map from Saturday, each green dot is a bulk carrier hauling soybeans. Notice how there is just one bulk carrier transporting soybeans off the East Coast, while dozens and dozens of vessels are traversing back and forth from Brazil and China.